Correlation Between Equinor ASA and Sachem Capital
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Sachem Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Equinor ASA and Sachem Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA ADR and Sachem Capital Corp, you can compare the effects of market volatilities on Equinor ASA and Sachem Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Equinor ASA with a short position of Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Sachem Capital.
Diversification Opportunities for Equinor ASA and Sachem Capital
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Equinor and Sachem is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp and Equinor ASA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Equinor ASA ADR are associated (or correlated) with Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Equinor ASA i.e., Equinor ASA and Sachem Capital go up and down completely randomly.
Pair Corralation between Equinor ASA and Sachem Capital
Given the investment horizon of 90 days Equinor ASA ADR is expected to generate 17.3 times more return on investment than Sachem Capital. However, Equinor ASA is 17.3 times more volatile than Sachem Capital Corp. It trades about 0.14 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about 0.05 per unit of risk. If you would invest 2,291 in Equinor ASA ADR on September 1, 2024 and sell it today you would earn a total of 127.00 from holding Equinor ASA ADR or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA ADR vs. Sachem Capital Corp
Performance |
| Timeline |
| Equinor ASA ADR |
| Sachem Capital Corp |
Equinor ASA and Sachem Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Sachem Capital
The main advantage of trading using opposite Equinor ASA and Sachem Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Sachem Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sachem Capital will offset losses from the drop in Sachem Capital's long position.| Equinor ASA vs. Shell PLC ADR | Equinor ASA vs. BP PLC ADR | Equinor ASA vs. Eni SpA ADR | Equinor ASA vs. Galp Energa |
| Sachem Capital vs. Sachem Capital Corp | Sachem Capital vs. Eagle Point Credit | Sachem Capital vs. B Riley Financial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
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